Legally Speaking with Michael Mulligan

Bookkeeper fraud sentence appeal, MS Teams court decorum, and the General Anti-Avoidance Rule

December 06, 2021 Michael Mulligan
Legally Speaking with Michael Mulligan
Bookkeeper fraud sentence appeal, MS Teams court decorum, and the General Anti-Avoidance Rule
Show Notes

This week on Legally Speaking with Michael Mulligan:

The BC Court of Appeal recently allowed a sentence appeal by the Crown and converted a two-year conditional sentence, sometimes called house arrest, into a regular jail sentence for a bookkeeper convicted of defrauding her employer.

Because the bookkeeper had a previous conviction for similar behaviour and was acting in a position of trust, the two-year jail sentence was not surprising. A theft or fraud committed by someone in a position of trust is more serious than theft or fraud committed by a stranger.

A sentence appeal is not, however, a matter of asking the Court of Appeal to substitute its judgment for that of a trial judge. Trial judges have a wide discretion to determine an appropriate sentence.

The sentence appeal was allowed because the trial judge had accepted as true a submission by the defence that the offending occurred as a result of depression and drug addiction when that was denied by the Crown.

At a sentencing hearing, the Crown and defence can make submissions about aggravating, or mitigating, factors that would have an impact on the sentence. Where the other party doesn’t deny the aggravating or mitigating factor a judge can proceed on the basis that it’s true.

In this case, however, the Crown denied that depression or drug use was the reason for the fraud. Where a factor like this is denied, the other party should be given an opportunity to prove it and, if that is not done, the judge should not consider the alleged factor.

Also on the show, the evolving directions for virtual court appearances in Provincial Court are discussed.

As a result of COVID, the BC Provincial Court has made significant use of MS Teams for virtual court appearances. In addition to health considerations, this has allowed for increased efficiency with suitable matters being dealt with remotely and judges from across the province being able to deal with cases in other locations.

Rules of decorum for virtual court appearances have been evolving. They now include a desire for neutral backgrounds, as well as what would have seemed obvious like not eating, drinking, or smoking during a court appearance.

Finally, a Supreme Court of Canada case dealing with the Income Tax Act provision referred to as the GAAR or the General Anti-Avoidance Rule is discussed.

The GAAR is controversial because it purports to prohibit “abusive” tax transactions that are permitted by the wording of the Income Tax Act.

The GAAR acts as a limit on both tax certainty and the well-accepted principle that taxpayers are entitled to arrange their affairs to minimize the amount of tax payable.

The legal test to determine if the GAAR prohibits a transaction turns on whether it’s “abusive”. This, in turn, is based on an assessment of the “object, spirit, and purpose” of whatever rule is at issue.

In the case discussed, which involved a complicated corporate structure that relied on a tax treaty with Luxembourg, the GAAR was found not to apply because the purpose of the tax treaty was to encourage investment in Canada even if less tax might be collected in Canada.

Follow this link for a transcript of the show and links to the cases discussed.